The record-low temperatures that have hit a swath of the U.S. in the last two months have had a significant effect on natural gas prices.
The lower temperatures, the higher the prices.
The news that a second -- don't kill the messenger -- polar vortex might affect the U.S. in the coming week lit a (figurative) fire under natural gas traders Wednesday.
Natural gas futures prices shot up more than 12 percent in trading, hitting about
While that's not good news for those using natural gas to heat their homes, it is good news for those companies -- and governments -- that depend on natural gas exploration and production to drive revenues.
Unlike severance taxes from coal, which are based on the raw amount produced, natural gas taxes are calculated off of the sale price. Higher prices mean more dollars-worth of natural gas is sold and that produces more tax revenues for the state.
But while commonly quoted futures price for natural gas -- the Henry Hub Natural Gas Futures that trade on the
State Deputy Revenue Secretary
"Marcellus natural gas has been selling at a discount to
Muchow said since the fiscal year began
Muchow said the state has been fortunate to see an increase in overall natural gas production, which has help offset the less-than-expected prices. Through January, natural gas severance tax collections were just
Even though local natural gas sales aren't keeping pace with the national market, Muchow did say the severe winter could still help buoy state severance tax revenue -- once you factor coal into the equation.
"The cold weather patterns can only help our domestic energy market," he said.
Since natural gas competes with coal in the domestic power generation market, the price spike has caused power producers to lean more on coal.
"The recent rebound in natural gas prices and colder than normal weather patterns have helped to stabilize domestic steam coal markets as coal-fired generation is rising while natural gas-fired generation is falling," Muchow said.
However, he said while steam coal production rising in northern
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